Inheriting unmortgageable property 12 January at 9:09PM in Deaths, funerals & probate 35 replies 2.3K views

lisyloo

I think I may have inherited a share of an unmortgageable property (no Building PRC certificate).
Can I gift half of my share to my husband, so that we can each use our CGT allowance if the property is made mortgageable and increased in value?
Can I actually do that If I don’t actually hold the title? As the executors of the estate will be selling it so I don’t actually own anything? Although I’m deemed to have inherited it at the lower value.

p00hsticks

lisyloo said:

I think I may have inherited a share of an unmortgageable property (no Building PRC certificate).
Can I gift half of my share to my husband, so that we can each use our CGT allowance if the property is made mortgageable and increased in value?
Can I actually do that If I don’t actually hold the title? As the executors of the estate will be selling it so I don’t actually own anything? Although I’m deemed to have inherited it at the lower value.

If the executors intend to sell the property and then give the money to the beneficiaries, rather than put the property itself into the names of the beneficiaries for them to do what they want with, then it would be the estate that would be liable for any CGT due on the difference between what was decalred as the probate value and what they sell the property for.

The will may specifically stipulate that the property should be sold and the proceeds distributed or if it is to be passed directly to  the beneficiaries.

Keep_pedalling

If the executors are selling it then it will be sold as is is now so CGT should not come into it.

lisyloo

Thanks very helpful.
The will says.........

My trustess shall hold my interest (50% tenant in common) in the freehold property ........................... upon trust to sell the same ...........the property or the proceeds of sale thereof or the investments representing the same shall be held by my trustees upon trust for such of my children as shall be living at my death and if more than one in equal shares absolutely.

Does that mean it could be either property or money according to the trustees?

There are 4 beneficiaries of my fathers 50% - all married.
The are 2 beneficiaries of the other 50% (1 married).
I mention the spouses as that potentially makes 11 CGT allowances.

Keep_pedalling

lisyloo said:

My trustess shall hold my interest (50% tenant in common) in the freehold property ........................... upon trust to sell the same ...........the same shall be held by my trustees upon trust for such of my children as shall be living at my death and if more than one in equal shares absolutely.

Who owns the other half

lisyloo

Keep_pedalling said:

lisyloo said:

My trustess shall hold my interest (50% tenant in common) in the freehold property ........................... upon trust to sell the same ...........the same shall be held by my trustees upon trust for such of my children as shall be living at my death and if more than one in equal shares absolutely.

Who owns the other half

The other half belonged to his wife (tenant in common) who pre-deceased him.
It was a mirror will so same wording. Held upon trust for her daughter and grandson to sell the same (but only with his written consent during his lifetime).

The title was not changed when she died. 

So am I right in thinking if the property was sold by the trustees/executors then the estate pays 28% CGT with 2 executors CGT allowances.
Whereas if property is split among the 6 beneficiaries, they can then gift their half to their spouses, so there will be 11 CGT allowances and mostly 18% CGT?

lisyloo

Keep_pedalling said:

If the executors are selling it then it will be sold as is is now so CGT should not come into it.

I think selling it unmortgageable at a low value is highly unlikely (unless something major turns up).
As far as I know the house is perfectly fine it's just lacking the certificate because the local authority didn't do it in 1997. Of course it's possible it needs work to bring it up to standards and we'd have to take a view on that when we get a report done.

Much more likely that PRC building certificate thingy will be paid for and any remedial work done to sell at a much higher value.

So the question is do the executors do that work and sell it, or do they pass on the title directly onto the beneficiaries (I read property or the proceeds of sale as they can do either) who then have their own CGT to pay, but potentially spread across 11 people and at lower rates (if I've got that right).

Owning a house between 11 people has potential to go wrong, but I think our interests are aligned here and IME there's nothing you can trust more than self-interest.

theoretica

lisyloo said:

Keep_pedalling said:

lisyloo said:

My trustess shall hold my interest (50% tenant in common) in the freehold property ........................... upon trust to sell the same ...........the same shall be held by my trustees upon trust for such of my children as shall be living at my death and if more than one in equal shares absolutely.

Who owns the other half

The other half belonged to his wife (tenant in common) who pre-deceased him.
It was a mirror will so same wording. Held upon trust for her daughter and grandson to sell the same (but only with his written consent during his lifetime).

The title was not changed when she died. 

So am I right in thinking if the property was sold by the trustees/executors then the estate pays 28% CGT with 2 executors CGT allowances.
Whereas if property is split among the 6 beneficiaries, they can then gift their half to their spouses, so there will be 11 CGT allowances and mostly 18% CGT?

The *estate* only has one CGT allowance - the number of executors is irrelevant.  But I don't know about spouses and that many beneficiaries.

Keep_pedalling

lisyloo said:

Keep_pedalling said:

lisyloo said:

My trustess shall hold my interest (50% tenant in common) in the freehold property ........................... upon trust to sell the same ...........the same shall be held by my trustees upon trust for such of my children as shall be living at my death and if more than one in equal shares absolutely.

Who owns the other half

The other half belonged to his wife (tenant in common) who pre-deceased him.
It was a mirror will so same wording. Held upon trust for her daughter and grandson to sell the same (but only with his written consent during his lifetime).

The title was not changed when she died. 

So am I right in thinking if the property was sold by the trustees/executors then the estate pays 28% CGT with 2 executors CGT allowances.
Whereas if property is split among the 6 beneficiaries, they can then gift their half to their spouses, so there will be 11 CGT allowances and mostly 18% CGT?

I just had a look at your previous thread so it is a little bit clearer now. There is unlikely to be CGT on your share of the sale as there should be no taxable gain between date of death and sale of the property. If there is a gain (perhaps because the house was undervalued for probate) your father’s estate will have a single allowance (not one per executor) Your step mother’s beneficiaries however may have a CGT liability on any gain from the value declared on her IHT return as it does not look like your father was given a life interest in her will, which would have avoided that.

lisyloo

Keep_pedalling said:

lisyloo said:

Keep_pedalling said:

lisyloo said:

My trustess shall hold my interest (50% tenant in common) in the freehold property ........................... upon trust to sell the same ...........the same shall be held by my trustees upon trust for such of my children as shall be living at my death and if more than one in equal shares absolutely.

Who owns the other half

The other half belonged to his wife (tenant in common) who pre-deceased him.
It was a mirror will so same wording. Held upon trust for her daughter and grandson to sell the same (but only with his written consent during his lifetime).

The title was not changed when she died. 

So am I right in thinking if the property was sold by the trustees/executors then the estate pays 28% CGT with 2 executors CGT allowances.
Whereas if property is split among the 6 beneficiaries, they can then gift their half to their spouses, so there will be 11 CGT allowances and mostly 18% CGT?

I just had a look at your previous thread so it is a little bit clearer now. There is unlikely to be CGT on your share of the sale as there should be no taxable gain between date of death and sale of the property. If there is a gain (perhaps because the house was undervalued for probate) your father’s estate will have a single allowance (not one per executor) Your step mother’s beneficiaries however may have a CGT liability on any gain from the value declared on her IHT return as it does not look like your father was given a life interest in her will, which would have avoided that.

Thanks, the reason why I think there will be a taxable gain is that I currently think the property was unmortgageable at date of death and therefore of low value. This low value is the one that should be used for probate isn't it?

If the property is inherited at that low value and then it's just a shared property and the owners decide to pay for a building certificate and any remedial works and make the property mortgageable then it vastly increases in value.
As this will be a second property for everyone and not their residence then the gain in value is subject to CGT is is not?

What's the difference between a life interest and the clause that says the property can only be sold with his consent during his lifetime?

lisyloo

Thanks for all the help so far

If an un-mortgageable property worth £50K at date of date, has it's value increased by trustees/executors to say £250K by making it mortgageable, then what is the probate value?